3 INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As of September 30, 2023, and December 31, 2022 EQUITY Capital 28 891,303 891,303 Reserves 28 2,815,170 3,115,239 Other accrued comprehensive income 28 (167,147) (63,864) Items that will not be reclassified to profit or loss 597 617 Items that may be reclassified to profit or loss (167,744) (64,481) Retained earnings (expense) from prior years 28,339 38,618 Profit for the period 28 808,651 319,486 Minus: provisions for dividends, interest payments and ...

lssuance of first green mortgage bond in Chile | --- | --- | --- | --- | --- | --- | |--------------------------------------------------------------------|---------|--------------|--------------|--------------|--------------| | 1. Among the best top 10 companies to work for in Chile (#) | GPTW #1 | Top Employer | Top Employer | Top Employer | Top Employer | | 2. Women in managerial positions (%) | 25 % | 28% | 31% | 28% | 30% | | 3. Eliminate gender pay gap (%) | 3.1 % | 2.5 % | 2.4% | 2.1% | 0 % | | 4. Peo ...

Banco Santander-Chile (NYSE:BSAC) Q3 2023 Earnings Conference Call November 3, 2023 10:00 AM ET Company Participants Emiliano Muratore - Chief Financial Officer Cristian Vicuna - Chief, Strategic Planning and IR Carmen Gloria Silva - Economist Conference Call Participants Yuri Fernandes - JPMorgan Daniel Mora Ardila - Credicorp Capital Neha Agarwala - HSBC Global Research Ernesto Gabilondo - Bank of America Nicolas Riva - Bank of America Operator Ladies and gentlemen, thank you for standing by. And I would ...

INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the periods ending on June 30, 2023, and 2022, and December 31, 2022 RUT: 81.513.400-1 | Teléfono: (56 2) 2940 0000 | www.pwc.cl Interim Consolidated Financial Statements June 2023 / Banco Santander-Chile Interim Consolidated Financial Statements June 2023 / Banco Santander-Chile Interim Consolidated Financial Statements June 2023 / Banco Santander-Chile We conducted our review in accordance with Generally Accepted Auditing Standards in Chile applicable to revie ...

[Management Commentary Overview](index=1&type=section&id=Management%20Commentary%20Overview) This section presents PwC Chile's review of the Management Commentary and highlights the forward-looking nature of the report [Independent Professional Review Report](index=2&type=section&id=Independent%20Professional%20Review%20Report) PwC Chile reviewed the 6M23 Management Commentary, finding no material modifications needed for CMF compliance, though it was not a full audit - The review concluded that no material modifications are needed for the Management Commentary to align with CMF requirements[4](index=4&type=chunk) - The review was conducted in accordance with Chilean auditing standards and was significantly less in scope than a full audit[365](index=365&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This document contains forward-looking statements about future business and economic performance, subject to various risks and uncertainties - The report includes forward-looking statements concerning future business and economic performance, which are subject to risks and uncertainties[5](index=5&type=chunk) - Key risk factors include macroeconomic trends, market movements, competitive pressures, technological developments, and customer creditworthiness[5](index=5&type=chunk) [Section 1: Key information](index=5&type=section&id=Section%201%3A%20Key%20information) This section summarizes the bank's 6M23 financial results, key indicators, and competitive market position, highlighting profitability declines and market leadership [Summary of results](index=5&type=section&id=Summary%20of%20results) 6M23 net income attributable to shareholders decreased 49.6% YoY to Ch$262,870 million, with ROAE at 12.9%, mainly due to lower NIM - Net income attributable to shareholders decreased **49.6% YoY** to **Ch$262,870 million** in 6M23, with an ROAE of **12.9%**[402](index=402&type=chunk) - The decrease in net income was mainly due to a lower Net Interest Margin (NIM) caused by slowing inflation and higher funding costs[402](index=402&type=chunk) - Despite the profit decline, net fee income increased by **38.5% YoY**, and the net contribution from business segments grew by **38.8% YoY**[8](index=8&type=chunk)[375](index=375&type=chunk) [Key financial information](index=6&type=section&id=Key%20financial%20information) June 2023 key financial indicators show declining profitability (ROAE 12.9%, NIM 2.1%) and asset quality (NPL 2.1%), but strong capital ratios Key Financial Indicators (Jun-23 vs Jun-22) | Indicator | Jun-23 | Jun-22 | Variation | | :--- | :--- | :--- | :--- | | **Profitability** | | | | | Net Interest Margin (NIM) | 2.1% | 4.1% | (197) bp | | Return on avg. equity | 12.9% | 28.7% | (1,583) bp | | **Asset Quality** | | | | | NPL ratio | 2.1% | 1.5% | 67 bp | | Coverage of NPLs ratio | 165.0% | 227.8% | (6,280) bp | | Cost of credit | 1.19% | 0.87% | 33 bp | | **Capital** | | | | | Core capital ratio | 11.0% | 11.1% | (12) bp | | BIS ratio | 17.5% | 17.8% | (26) bp | | **Clients** | | | | | Total clients | 3,737,056 | 4,028,551 | (7.2%) | | Active clients | 2,186,435 | 2,081,909 | 5.0% | Market Capitalization (YTD) | Indicator | Jun-23 | Jun-22 | Variation % | | :--- | :--- | :--- | :--- | | Net income per share (Ch$) | 1.39 | 2.77 | (49.6%) | | Net income per ADR (US$) | 0.70 | 1.20 | (41.9%) | | Market capitalization (US$ million) | 8,895 | 7,750 | 14.8% | [Competitive position](index=8&type=section&id=Competitive%20position) Banco Santander Chile leads the Chilean market in key loan and account categories, maintaining high investment-grade credit ratings - The bank is the market leader in total loans (**17.3% share**), mortgage loans (**21.1%**), consumer loans (**19.4%**), current accounts (**27.5%**), and credit card purchases (**23.2%**)[407](index=407&type=chunk) - The bank holds high credit ratings from multiple agencies, such as **A2 from Moody's**, **A- from S&P**, and **A+ from JCR**, all with a Stable Outlook[14](index=14&type=chunk) [Section 2: Business environment](index=8&type=section&id=Section%202%3A%20Business%20environment) This section details Chile's weakening economic conditions, moderating inflation, anticipated interest rate cuts, and significant political and regulatory developments [Operating environment](index=9&type=section&id=Operating%20environment) Chile's economy faces weakening demand and a weak labor market, with moderating inflation and anticipated Central Bank interest rate cuts - Domestic demand is weakening, leading to a downward revision of the 2023 GDP growth forecast to **-1.0%**[385](index=385&type=chunk) - The labor market remains weak, with near-zero job creation and contracting labor demand, potentially pushing unemployment above **8%**[15](index=15&type=chunk) - Inflation is decreasing, with the annual CPI expected to fall below **4%** by the end of 2023. The Central Bank is expected to start cutting the MPR, forecasting a rate of **7.25%** by year-end[16](index=16&type=chunk)[387](index=387&type=chunk) Economic Forecasts | Indicator | 2022 | 2023 (E) | 2024 (E) | | :--- | :--- | :--- | :--- | | GDP (real var. % YoY) | 2.4% | (1.0%) | 2.0% | | CPI Inflation | 12.6% | 3.9% | 3.0% | | Monetary policy rate (year-end) | 11.25% | 7.25% | 3.75% | [Political and Regulatory Environment](index=11&type=section&id=Political%20and%20Regulatory%20Environment) Chile is undergoing a constitutional process, approved a new mining royalty tax, proposed pension reform, and implemented new interchange fee limits - A new constitutional process is underway, with a mandatory referendum on the new draft scheduled for December 17, 2023[389](index=389&type=chunk) - A major tax reform was rejected, but a new mining royalty tax was approved in May 2023, expected to collect **0.45% of GDP** starting in 2024[21](index=21&type=chunk)[47](index=47&type=chunk) - A pension reform bill proposed in November 2022 aims to create a mixed system with an additional **6% employer contribution** to a social security fund[391](index=391&type=chunk) - New, lower interchange fee limits for debit, credit, and prepaid cards were approved and will be implemented gradually through November 2024[23](index=23&type=chunk)[392](index=392&type=chunk) - The Fogaes Law was enacted to provide state guarantees for housing and construction financing, as well as for working capital and investment for SMEs[24](index=24&type=chunk)[50](index=50&type=chunk) [Section 3: Segment information](index=15&type=section&id=Section%203%3A%20Segment%20information) This section analyzes the net contribution of Retail, Middle Market, and CIB segments, which collectively grew 38.8% YoY, alongside a significant loss in Corporate Activities [Results by segment](index=15&type=section&id=Results%20by%20segment) 6M23 total net contribution from business segments grew 38.8% YoY, driven by strong revenue, while Corporate Activities reported a significant net loss Net Contribution by Business Segment (6M23, Ch$ million) | Segment | Net Contribution | Change YoY | | :--- | :--- | :--- | | Retail Banking | 338,022 | 21.0% | | Middle market | 212,321 | 38.0% | | CIB | 207,144 | 84.5% | | **Total Business sub-segments** | **757,487** | **38.8%** | | Corporate activities | (461,393) | (473.4%) | | **Total** | **296,094** | **(55.8%)** | [Retail banking](index=17&type=section&id=Retail%20banking) Retail Banking's net contribution grew 21.0% YoY, driven by increased net interest income and fees, despite a 57.4% rise in loan provisions - Net contribution increased **21.0% YoY**, driven by a better funding mix, loan growth, and a **29.3% surge in fees**[61](index=61&type=chunk) - Loans in the segment grew **2.4% YTD** and **1.3% QoQ**, primarily led by mortgage loans and credit cards[60](index=60&type=chunk) - Provisions rose **57.4% YoY**, reflecting portfolio growth and the normalization of asset quality as the economy slows[61](index=61&type=chunk) [Middle market](index=18&type=section&id=Middle%20market) Middle Market's net contribution grew 38.0% YoY, fueled by a 21.6% rise in total revenues and a 35.4% decrease in loan loss provisions - Net contribution grew **38.0% YoY**, supported by a **22.8% increase in net interest income** from better spreads and volume growth[35](index=35&type=chunk) - Loan loss provisions fell **35.4% YoY**, mainly because higher-risk loans from sectors like construction were eliminated from the portfolio during 2022[35](index=35&type=chunk) [Corporate Investment Banking (CIB)](index=19&type=section&id=Corporate%20Investment%20Banking%20%28CIB%29) CIB's net contribution surged 84.5% YoY, driven by strong income and fee growth, though quarterly performance saw an 11.3% QoQ decline - Net contribution increased **84.5% YoY**, with total income up **53.0%**. This was driven by a **76.9% rise in net interest income** and a **54.1% increase in fees**[431](index=431&type=chunk) - Deposits grew **12.5% YTD**, driven by higher demand for time deposits in CLP due to attractive rates[37](index=37&type=chunk) - Net contribution decreased **11.3% QoQ**, primarily because of lower revenues from financial transactions following an exceptionally strong 1Q23[68](index=68&type=chunk) [Corporate center/ Financial Management](index=20&type=section&id=Corporate%20center%2F%20Financial%20Management) The Corporate Center reported a net loss of Ch$461,393 million in 6M23, primarily due to margin compression from higher funding costs and lower investment returns - The segment recorded a net loss of **Ch$461,393 million** in 6M23, primarily due to margin compression from higher funding costs and lower returns on the investment portfolio[39](index=39&type=chunk)[433](index=433&type=chunk) - The net loss widened by **4.6% QoQ** in 2Q23 as high interest rates and lower inflation continued to negatively impact margins[70](index=70&type=chunk) [Section 4: Balance sheet and results](index=22&type=section&id=Section%204%3A%20Balance%20sheet%20and%20results) This section provides an in-depth analysis of the bank's balance sheet, including loan and deposit growth, capital adequacy, and income statement performance, highlighting NII decline and strong non-interest income [Balance Sheet Analysis](index=22&type=section&id=Balance%20Sheet%20Analysis) As of June 2023, total loans grew 1.3% YTD, deposits rose 4.1% YTD with a shift to time deposits, and the bank maintained strong capital ratios Loan Portfolio Breakdown (Ch$ million) | Loan Type | Jun-23 | Var % YTD | Var % QoQ | | :--- | :--- | :--- | :--- | | Consumer loans | 5,411,860 | 2.4% | 1.3% | | Residential mortgage loans | 16,407,125 | 4.3% | 2.4% | | SME | 3,556,013 | (3.6%) | (0.6%) | | **Total Gross Loans** | **39,362,284** | **1.3%** | **0.6%** | - Total deposits increased **4.1% YTD**, driven by a **14.7% rise in time deposits** as clients sought higher yields, while demand deposits fell **5.8%**[115](index=115&type=chunk)[135](index=135&type=chunk) - The bank maintained strong capital adequacy, with a **CET1 ratio of 11.0%** and a total **BIS ratio of 17.5%** at the end of June 2023[139](index=139&type=chunk) - Total equity increased **6.3% QoQ** and **1.2% YTD**, reaching **Ch$4,287,883 million**, influenced by earnings and a lower negative impact from valuation adjustments[138](index=138&type=chunk) [Income Statement Analysis](index=28&type=section&id=Income%20Statement%20Analysis) In 6M23, NII fell 44.5% YoY due to lower inflation and higher funding costs, offset by strong non-interest income and effective cost control - Net income from interest and readjustments decreased **44.5% YoY** in 6M23, primarily due to lower inflation (UF variation of **2.8% in 6M23 vs. 6.8% in 6M22**) and higher funding costs[144](index=144&type=chunk)[157](index=157&type=chunk) - Net fee income grew **38.5% YoY**, driven by increased client activity, higher card usage, and contributions from Getnet. The recurrence ratio improved to **60.6% from 40.5%**[152](index=152&type=chunk) - Credit loss expenses rose **42.4% YoY**, with the cost of credit increasing to **1.19% from 0.87%** as asset quality trends back toward pre-pandemic levels[162](index=162&type=chunk) - Operating expenses fell **7.5% YoY**, reflecting solid cost control and productivity gains, although the efficiency ratio worsened to **45.4%** due to lower operating income[98](index=98&type=chunk)[185](index=185&type=chunk) - Income tax expense decreased **71.5% YoY** due to lower pre-tax profits and a lower effective tax rate (**8.3% vs 14.0%**) resulting from the monetary correction of the capital tax base in a high CPI environment[76](index=76&type=chunk) [Section 5: Guidance](index=38&type=section&id=Section%205%3A%20Guidance) This section outlines the bank's financial targets for 2023, including expected loan growth, NIM, non-interest income growth, cost of credit, ROE, and CET1 ratio [2023 Guidance](index=38&type=section&id=2023%20Guidance) For FY2023, the bank expects approximately 5% loan growth, a 2.3% NIM, 20% non-interest income growth, and an ROE of around 15% Full Year 2023 Guidance | Indicator | Guidance | Key Factor | | :--- | :--- | :--- | | Loans | Approx. 5% growth | Economic growth | | NIM | 2.3% | Inflation, MPR reduction speed | | Non-NII | Growth of 20% | Client growth and product usage | | Costs | Negative growth vs 2022 | Inflation, productivity, investment | | Cost of credit | 1.1 - 1.2% | Asset quality normalization | | ROE | Approx. 15% | Rate and inflation scenarios | | CET1 | > 10.5% | ROE, RWA growth, dividend policy | - The bank maintains its long-term ROE expectation in the range of **17%-19%**[80](index=80&type=chunk) [Section 6: Risks](index=39&type=section&id=Section%206%3A%20Risks) This section details the bank's management of credit, market, liquidity, and operational risks, including asset quality trends, strong liquidity ratios, and operational loss increases [Credit Risk](index=39&type=section&id=Credit%20Risk) Credit risk management focuses on economic slowdown, with the NPL ratio increasing to 2.1% and impaired loan ratio to 5.4%, reflecting asset quality normalization - Provisions are estimated using expected loss models, classifying commercial debtors into Normal, Substandard, and Impaired portfolios based on creditworthiness[82](index=82&type=chunk)[85](index=85&type=chunk) Asset Quality Ratios | Ratio | Jun-23 | Dec-22 | Jun-22 | | :--- | :--- | :--- | :--- | | NPL ratio | 2.1% | 1.8% | 1.5% | | Impaired loan ratio | 5.4% | 4.8% | 4.7% | | NPL coverage ratio | 165.0% | 185.3% | 227.8% | | Expected loss ratio | 2.8% | 2.7% | 2.7% | - The loan portfolio is diversified, with the largest exposures to mortgage (**45.0%**), social services (**30.2% of commercial loans**), and commerce (**17.3% of commercial loans**)[178](index=178&type=chunk) [Market and Liquidity Risk](index=45&type=section&id=Market%20and%20Liquidity%20Risk) The bank actively manages market risks, maintaining strong liquidity with LCR at 153.3% and NSFR at 108.5%, both well above regulatory minimums - The bank maintains strong liquidity, with an **LCR of 153.3%** and an **NSFR of 108.5%** as of June 2023[116](index=116&type=chunk)[184](index=184&type=chunk)[201](index=201&type=chunk) - High-Quality Liquid Assets (HQLA) amounted to **Ch$6,573,100 million**, primarily composed of Level 1 assets like government bonds[197](index=197&type=chunk) - Interest rate risk for the trading portfolio is managed using Value at Risk (VaR) limits, with the consolidated average VaR at **US$5.54 million** as of June 30, 2023[203](index=203&type=chunk)[204](index=204&type=chunk) - The bank has more assets than liabilities indexed to the UF (inflation-indexed unit), creating a positive sensitivity to moderate inflation rises, which is managed within established limits[205](index=205&type=chunk) [Operational Risk](index=50&type=section&id=Operational%20Risk) Total operational losses increased 31.4% YoY, primarily due to higher client/product, processing, and fraud-related losses Operational Risk Losses (Ch$ million) | Loss Category | Jun-23 | Jun-22 | Change % | | :--- | :--- | :--- | :--- | | Fraud | 1,567 | 1,387 | 13.0% | | Labor related | 2,977 | 2,997 | (0.7%) | | Client / product related | 468 | 44 | 972.6% | | Processing | 2,311 | 1,245 | 85.7% | | **Total** | **7,500** | **5,707** | **31.4%** | [Section 7: Credit risk ratings](index=52&type=section&id=Section%207%3A%20Credit%20risk%20ratings) Banco Santander Chile maintains strong investment-grade credit ratings from international and local agencies, all with a stable outlook [Credit Ratings](index=52&type=section&id=Credit%20Ratings) Banco Santander Chile maintains strong investment-grade credit ratings from international and local agencies, all with a stable outlook International and Local Credit Ratings | Agency | Rating Type | Rating | | :--- | :--- | :--- | | **International** | | | | Moody's | Bank Deposit | A2/P-1 | | Standard & Poor's | Long-term Issuer Credit | A- | | JCR | Foreign Currency Long-term | A+ | | **Local** | | | | Feller Rate | Long-term deposits | AAA | | ICR | Long-term deposits | AAA | [Section 8: Stock Performance](index=53&type=section&id=Section%208%3A%20Stock%20Performance) This section provides an overview of the bank's shareholding structure, dividend policy, and key stock performance indicators as of June 30, 2023 [Shareholding and Stock Information](index=53&type=section&id=Shareholding%20and%20Stock%20Information) As of June 2023, Santander Group holds 67% of shares, with 33% free float, and the bank maintains a 60% dividend payout policy - The shareholding structure consists of **67% held by the Santander Group** and **33% free float**[212](index=212&type=chunk) Stock Information as of June 30, 2023 | Indicator | Value | | :--- | :--- | | ADR Price (US$) | 18.85 | | Local Share Price (Ch$) | 37.94 | | Market Cap (US$ million) | 8,895 | | P/E (last 12 months) | 10.0x | | P/BV | 1.73 | | Dividend Yield | 6.8% | - The bank has a consistent dividend policy, paying out **60% of the previous year's earnings**[236](index=236&type=chunk) [Annex 1: Strategy and responsible banking](index=54&type=section&id=Annex%201%3A%20Strategy%20and%20responsible%20banking) This annex details the bank's strategic framework, commitment to responsible banking and ESG goals, and progress in digital transformation and client focus [Strategy and Culture](index=54&type=section&id=Strategy%20and%20Culture) The bank's strategy, guided by 'The Santander Way,' focuses on customer-centric processes, technology, and high performance through its 'Chile First' initiative - The bank's guiding model is 'The Santander Way,' with a mission to earn loyalty by acting responsibly and a style defined as Simple, Personal, and Fair[237](index=237&type=chunk)[260](index=260&type=chunk) - The 'Chile First' initiative focuses on developing an outstanding operation based on technology, customer-focused processes, specialization in corporate services, and attracting top talent[264](index=264&type=chunk)[240](index=240&type=chunk) [Responsible Banking and ESG](index=55&type=section&id=Responsible%20Banking%20and%20ESG) Santander is committed to responsible banking with goals including financially empowering 4 million people and achieving carbon neutrality, reflected in strong ESG ratings - The bank has 10 responsible banking goals, including financially empowering **4 million people by 2025** (**2.7 million achieved by June 2023**) and achieving carbon neutrality in operations by 2025[269](index=269&type=chunk) - Progress has been made on gender equality, with women holding **30.3% of management positions** and the gender pay gap reduced to **2.1%**[244](index=244&type=chunk)[269](index=269&type=chunk) - The bank holds strong ESG ratings, including an **'A' from MSCI** and is included in the FTSE4Good index[293](index=293&type=chunk) [Digital Transformation and Client Focus](index=59&type=section&id=Digital%20Transformation%20and%20Client%20Focus) The bank's digital strategy has resulted in nearly 2 million digital clients, optimized branch networks, and a top-ranking Net Promoter Score (NPS) - Digital clients reached nearly **2 million**, representing **90.5% of active clients**. Digital onboarding initiatives are key to growth and financial inclusion[273](index=273&type=chunk)[297](index=297&type=chunk) - The bank's market share in checking accounts is **27.4%**, and it has a **38.2% share in US dollar checking accounts**, driven by easy online opening[274](index=274&type=chunk) - The branch network is being optimized, with a **16.1% YoY decrease in branches** and a shift to the Work/Café model. This has improved productivity per employee by **6.8% YoY**[305](index=305&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk) - The bank holds the top position in Net Promoter Score (NPS) among its main Chilean peers[308](index=308&type=chunk) [Latest events and material facts](index=67&type=section&id=Latest%20events%20and%20material%20facts) The bank approved a 60% dividend payout, actively issued bonds, agreed to sell its stake in Transbank, and faced a fine for not reporting suspicious transactions [Corporate Actions and Events](index=67&type=section&id=Corporate%20Actions%20and%20Events) The bank approved a 60% dividend payout, actively issued bonds, agreed to sell its stake in Transbank, and faced a fine for not reporting suspicious transactions - A dividend of **Ch$2.57 per share**, representing **60% of 2022 profits**, was approved at the April 2023 Shareholders' Meeting[318](index=318&type=chunk)[335](index=335&type=chunk) - The bank has actively issued bonds in local (CLP, UF) and international (USD, JPY) markets throughout 2023 to manage its funding[320](index=320&type=chunk)[323](index=323&type=chunk)[325](index=325&type=chunk) - Shareholder banks, including Santander, have agreed to sell their stake in Transbank as part of a move to a four-part payment system model[321](index=321&type=chunk) - The Supreme Court applied a fine of **800 UF** to the bank for not reporting suspicious transactions in a timely manner[447](index=447&type=chunk) [Financial Statements Annexes](index=75&type=section&id=Financial%20Statements%20Annexes) This section provides detailed consolidated financial statements, including the balance sheet, income statements (YTD and quarterly), and a quarterly evolution of main financial ratios [Annex 2: Balance Sheet](index=75&type=section&id=Annex%202%3A%20Balance%20sheet) This annex provides the detailed consolidated balance sheet as of June 30, 2023, showing the composition of assets, liabilities, and equity Consolidated Balance Sheet Summary (Ch$ Million) | Item | Jun-23 | Dec-22 | % Chg. | | :--- | :--- | :--- | :--- | | **Total Assets** | **68,681,981** | **68,164,604** | **0.8%** | | Financial assets at amortized cost | 42,933,416 | 42,560,431 | 0.9% | | **Total Liabilities** | **64,394,098** | **63,926,232** | **0.7%** | | Deposits and other demand liabilities | 13,272,010 | 14,086,226 | (5.8%) | | Time deposits and other time liabilities | 14,892,389 | 12,978,790 | 14.7% | | **Total Equity** | **4,287,883** | **4,238,372** | **1.2%** | [Annex 3 & 4: Income Statements (YTD and Quarterly)](index=76&type=section&id=Annex%203%20%26%204%3A%20Income%20Statements) These annexes present detailed year-to-date and quarterly income statements for 6M23, 2Q23, 1Q23, and 2Q22 Income Statement Summary - YTD (Ch$ Million) | Item | Jun-23 | Jun-22 | % Chg. | | :--- | :--- | :--- | :--- | | Net income from Interest and readjustment | 530,992 | 957,550 | (44.5%) | | Net fee and commission income | 265,856 | 191,969 | 38.5% | | Total operating Income | 967,703 | 1,252,458 | (22.7%) | | Credit loss expenses | (231,587) | (162,602) | 42.4% | | **Income attributable to shareholders** | **262,870** | **521,257** | **(49.6%)** | [Annex 5: Quarterly Evolution of Main Ratios](index=77&type=section&id=Annex%205%3A%20Quarterly%20evolution%20of%20main%20ratios%20and%20other%20information) This annex provides a time-series view of key financial data and performance ratios over the last five quarters (2Q22 to 2Q23) Quarterly Ratio Evolution | Ratio | 2Q22 | 4Q22 | 1Q23 | 2Q23 | | :--- | :--- | :--- | :--- | :--- | | Net Interest margin (NIM) | 4.5% | 3.9% | 2.2% | 2.0% | | Efficiency ratio | 38.0% | 52.4% | 44.4% | 46.3% | | Return on avg. Equity | 31.7% | 10.1% | 13.3% | 12.6% | | Core Capital ratio (CET1) | 9.6% | 11.1% | 10.5% | 11.0% | | NPLs / total loans | 1.5% | 1.8% | 1.9% | 2.1% |

Financial Data and Key Metrics Changes - The bank's accumulated net income as of June 2023 totaled CLP263 billion, decreasing 50% year-over-year [57] - The book value of equity increased 16% year-over-year, with TNAV per share and dividend per share growing 23% [28] - The NPL ratio rose to 2.1%, gradually returning to pre-pandemic levels, with coverage of NPLs reaching 165% [34] Business Line Data and Key Metrics Changes - Retail banking results increased 21% year-over-year, driven by a greater client base and increased activity [14] - Getnet, the acquiring business, grew 83% year-over-year in SME clients, generating fees of CLP21 billion [11] - Corporate Investment Banking (CIB) results increased 84.5% year-over-year, with a significant rise in deposit spreads and fees [58] Market Data and Key Metrics Changes - The Central Bank of Chile began a monetary easing cycle, cutting the policy rate by 100 basis points [6] - The peso depreciated due to global factors, with inflation expected to close 2023 at around 4% [21] - Total deposits increased 0.3% quarter-on-quarter and 2% year-over-year, driven by a 25% year-over-year increase in time deposits [61] Company Strategy and Development Direction - The company aims to become a digital bank with Work/Cafes, focusing on customer service and technological innovation [23] - The strategy includes specialized services for corporate and private banking, seeking growth opportunities and sustainable transformation [23] - The bank is committed to maintaining cost discipline while investing in digital transformation [17] Management's Comments on Operating Environment and Future Outlook - Management expects a weak economy in the coming months, with a revised GDP contraction estimate of 1% for the year [5] - The bank anticipates a recovery in NIMs due to the Central Bank's easing cycle, projecting a NIM of 2.3% for the full year [38] - The cost of risk is expected to remain manageable at 1.1% to 1.2% for the rest of the year [38] Other Important Information - The bank's liquidity coverage ratio (LCR) was 175%, well above the minimum requirement [62] - The bank's operating expenses decreased 7.5% year-over-year, indicating effective cost control [36] - The bank is the only Chilean bank included in the Dow Jones Sustainability Index for Global Emerging Companies [27] Q&A Session Summary Question: NIM projection for 2024 - Management expects NIM for 2024 to be around 3.5%, with a potential rebound to 3% by the end of 2023 [41] Question: Impact of FCIC facility repayment and derivatives expiration - The expiration of the FCIC will be non-material for NII, as it will not significantly affect the overall NIM [43] Question: Effective tax rate normalization - The effective tax rate is expected to increase as inflation decreases, returning to levels closer to 20%-23% [97] Question: Reserve coverage ratio - The bank is comfortable maintaining the reserve coverage ratio at current levels due to significant voluntary provisions [72] Question: Non-NII growth expectations - Non-NII growth is expected to continue at around 10% for 2024 and 2025, despite headwinds from interchange fees [100] Question: Asset quality and NPL concerns - The commercial NPL has increased slightly, but management does not foresee significant risks in the portfolio [84]

Financial Data and Key Metrics Changes - In Q1 2023, net income totaled CLP 136 billion, a decrease of 42% year-over-year but an increase of 33% quarter-on-quarter [61] - The bank's return on equity (ROE) for the quarter reached 13%, with guidance for the full year adjusted to 15% to 17% due to higher than expected interest rates [70][114] - The net interest margin (NIM) remained stable at 2.2% quarter-on-quarter, with expectations for a decline to 2.4% for the year [64][69] Business Line Data and Key Metrics Changes - Retail banking loans grew by 1.1% quarter-on-quarter, driven by consumer loans, while origination of new mortgage loans has decelerated [63] - The net contribution from corporate and investment banking (CIB) increased by 76.7% year-over-year, with the middle market segment seeing a 31% increase [38] - Non-net interest income from fees and treasury rose by 33.8% year-over-year and 20% quarter-on-quarter, indicating strong performance across all segments [66] Market Data and Key Metrics Changes - The Chilean economy contracted by 2.5% in Q1 2023, with expectations for a mild contraction of around -0.25% for the year [19] - Inflation is projected to decrease to 5.1% by the end of the year, with the central bank maintaining a monetary policy rate of 11.25% [7][21] - The trade balance reached a surplus of CLP 7.5 billion, a historical record, with expectations for a current account deficit of 4% of GDP [6] Company Strategy and Development Direction - The bank aims to be a digital-first institution, focusing on specialized services for corporate and wealth management, and exploring new growth opportunities [12] - The introduction of Work/Café Expresso branches aims to enhance customer experience and operational efficiency, serving over 50,000 people weekly with a high NPS of 96 [13] - The bank is committed to sustainable finance, having supported sustainable operations for an amount of $230 million in 2022, a 390% increase from 2021 [33] Management's Comments on Operating Environment and Future Outlook - Management expects a gradual normalization of interest rates starting in the third quarter of 2023, which will positively impact ROE and NIM [54][70] - The bank anticipates continued strong client growth driven by digital initiatives and new product offerings, despite a challenging macroeconomic environment [45] - The outlook for asset quality remains stable, with a cost of credit expected to be manageable at 1.1% to 1.2% [69] Other Important Information - The bank's liquidity coverage ratio was 182%, well above the minimum requirement, indicating strong liquidity levels [41] - The core equity ratio at the end of Q1 2023 was 10.5%, reflecting a solid capital position [44] - The bank's operating expenses decreased by 1.2% year-over-year, with a focus on cost control and digitalization investments [67] Q&A Session Summary Question: What led to the reduction in ROE guidance? - Management indicated that the adjustment was primarily due to higher than expected interest rates, impacting the normalization process of NIMs and ROE [72][114] Question: Are there any regulatory changes expected? - Currently, there are no significant regulatory issues on the agenda that could affect the bank in the near term [73] Question: What is the outlook for operating expenses? - Management expects a one-off performance in cost control for this year, with a target for costs to grow below inflation in the future [84][103] Question: How sustainable is the current fee income growth? - The bank anticipates strong fee income growth this year, but expects a slowdown to above 10% in the following years [55][58] Question: What is the strategy regarding interest rate derivatives? - The bank has secured a more dovish path in the past but does not see significant opportunities currently due to the market's expectations [97] Question: What is the expected impact of asset quality on the bank? - Management noted that asset quality is normalizing, with NPL ratios returning to pre-pandemic levels, and expects to maintain a manageable cost of risk [86]

Credit Loss and Provision - Credit loss expenses due to receivables from customers amounted to 2,918 in 2023, compared to 20,314 in 2022[8] - Net provision for loan loss was 114,249 in 2023, up from 89,531 in 2022[40] Cash Flow and Cash Equivalents - Total cash flows used in financing activities were 29,217 in 2023, compared to (460,493) in 2022[19] - Final balance of cash and cash equivalents was 2,660,782 in 2023, up from 1,982,942 in 2022[19] Comprehensive Income and Profit - Other comprehensive income for the year was 15,205 in 2023[49] - Profit attributable to shareholders was 774,959 in 2021, with 264,577 allocated to dividends[52] - Subtotal: Comprehensive income for the year was 3,566 in 2023[50] - The Bank reported a profit for the year of 800,051 and 823,857 for the respective periods[89] Dividends and Shareholder Payments - Payment of common stock dividends was (464,977) in 2023[54] - Provision for payment of common stock was (10,107) in 2023[61] Currency and Financial Reporting - The Bank's functional and presentation currency is the Chilean Peso, with foreign currency transactions translated at the market exchange rate of $794.35 per US$ for March 2023[85][86] - Non-controlling interest represents the portion of net income and net assets not owned by the Bank, presented separately in financial statements[82] Operating Segments and Business Models - The Bank's operating segments are defined based on revenues, results, and assets exceeding 10% of combined operating segments[84] - The Bank's operating segments are reviewed regularly by the highest decision-making authority and can be aggregated if they meet specific criteria under IFRS 8, including similar economic characteristics and aspects like product nature, customer type, and distribution methods[135] - The Bank created a new business model called 'Held to collect investments' to manage higher liquidity levels due to market changes[131] Financial Assets and Liabilities - The Bank's financial assets are classified based on business models and contractual cash flow characteristics, measured at amortised cost, fair value through other comprehensive income, or fair value through profit or loss[122][130] - Financial assets are classified based on the business model, which determines whether cash flows will come from contractual cash flows, selling financial assets, or both[146] - Financial assets can be measured at fair value through profit or loss if not held within a business model aimed at collecting contractual cash flows or if the objective is achieved by both collecting cash flows and selling assets[148] - Financial liabilities are subsequently measured at amortised cost, except for derivatives measured at fair value through profit or loss[153] - Financial liabilities are derecognised when the obligation is discharged, cancelled, or expired, and loans follow specific FMC requirements for derecognition[167] Derivatives and Risk Management - The Bank uses financial derivatives for risk management, trading, and hedging purposes[125] - Derivatives are classified as either trading instruments or hedging instruments, with trading derivatives measured at fair value through profit or loss[169] - The Bank uses the IAS 39 guidelines for hedge accounting, requiring specific conditions to be met for a financial derivative to be considered a hedging derivative[181] - The fair value of financial derivatives in trading books is deemed similar to their daily quoted price, with OTC derivatives calculated using NPV and option pricing models, including CVA and DVA adjustments[184] - Derivatives are recorded at fair value from the trade date, with changes in fair value recognized in the Interim Consolidated Income Statements[192] Fair Value Measurement - The Bank's fair value measurement considers market conditions and characteristics of assets or liabilities[99] - The Bank uses internal models to estimate fair value when market quotations are not observable, relying on observable market data and sometimes unobservable inputs[158] - Financial instruments at fair value determined by published prices in active markets (Level 1) include government bonds, corporate bonds, and exchange-traded derivatives[193] Leases and Right-of-Use Assets - The Bank's lease liabilities and right-of-use assets are recognized according to IFRS 16 'Leases'[96] - Lease contracts are measured at cost initially, with rent adjustments due to UF variations treated as new measurements and recognized as amendments to the obligation[191] - The Bank assesses whether contracts contain leases based on the right to control the use of an identified asset, with short-term leases (≤12 months) recorded as straight-line expenses[195] - The Bank has not entered into lease agreements with guarantee clauses for residual value or variable lease payments[196] Property, Plant, and Equipment - The useful life of property, plant, and equipment is reviewed at the end of each reporting period, with adjustments made to depreciation charges if significant changes are detected[190] Intangible Assets and Receivables - Intangible assets are recorded at acquisition or production cost, minus accumulated amortization and impairment losses[200] - Factored receivables are valued at the amount disbursed by the Bank, with price differences recorded as interest income using the effective interest method[199] Shareholding and Control - The Bank holds 67.18% of its shares controlled by Banco Santander Spain through subsidiaries[106] Valuation and Management of Financial Instruments - The Bank has a formal process for the systematic valuation and management of financial instruments, with responsibilities divided between Treasury and Market Risks divisions[160] Market Conditions and Financial Instruments - No significant investments in listed financial instruments ceased to be recorded at their quoted market value as of March 31, 2023, 2022, and December 2022[186]

Pandemics, including the global COVID-19 pandemic, and other public health emergencies have materially impacted, and may in the future materially impact, our financial condition, liquidity and results of operations. In 2020, the Chilean government also announced a series of measures to support lending as a result of the economic dislocation seen at the beginning of the COVID19 pandemic. The largest measures were to provide an additional U.S.$3 billion to the Fondo de Garantía para Pequeños Empresarios (Smal ...

[Form 6-K Filing for Banco Santander-Chile](index=1&type=section&id=Form%206-K%20Filing%20for%20Banco%20Santander-Chile) [Filing Information](index=1&type=section&id=Filing%20Information) This Form 6-K filing by Banco Santander-Chile, a foreign issuer, outlines its SEC registration and compliance - The report is a **Form 6-K** filed by **Banco Santander-Chile**, a foreign issuer, with the SEC under Commission File Number **001-14554**[6](index=6&type=chunk)[9](index=9&type=chunk) - The registrant's principal executive office is located at **Bandera 140, Santiago, Chile**[2](index=2&type=chunk) - The filing is made pursuant to **Rule 13a-16 or 15d-16** of the Securities Exchange Act of 1934[4](index=4&type=chunk) [Material Fact (Exhibit 99.1)](index=2&type=section&id=Material%20Fact%20%28Exhibit%2099.1%29) The filing's primary content is Exhibit 99.1, designated as a 'Material Fact' - The report includes **Exhibit 99.1**, described as a 'Material Fact'[5](index=5&type=chunk)[10](index=10&type=chunk) [Signatures](index=3&type=section&id=Signatures) The report was formally signed on February 21, 2023, by Cristian Florence, General Counsel for Banco Santander-Chile - The report was signed on **February 21, 2023**, by **Cristian Florence**, General Counsel of Banco Santander-Chile[3](index=3&type=chunk)[11](index=11&type=chunk)